Movielink is for sale, but nobody wants to buy it

The five Hollywood movie studios that own Movielink have hung a for sale sign …

Downloaded digital music sales broke into the mainstream once Apple was able to convince the record labels to relax their DRM sphincters a bit in order to introduce a price and usage model most consumers could live with. That success has eluded the movie scene, where the download rental market is weak and online digital sales are all but nonexistent. The biggest online movie service, Movielink, does a fraction of the business that the music stores do. In a further indignity, the five movie studios that run the service as a joint venture have been unsuccessfully trying to sell it for months.

For the uninitiated, here's how Movielink works. The joint venture of Warner Brothers, MGM, Paramount, Universal, and Sony offers a library of about 1,700 titles for rental and purchase. Users can download movies for US$1.99 for a 24-hour rental or can buy films starting at US$8.99 each. It requires a PC or laptop with a broadband connection and Windows 2000 or XP and as such, isn't viewable on a TV without some work unless you have a media center PC. All in all, it's not a very compelling service for most people, and lack of buzz around the service appears to bear that out. One industry insider has gone so far as to tell us that the service is "unprofitable and irrelevant."

Several months ago, the studios that own and operate Movielink decided it was time to sell out. There have been a handful of big players in the video and Internet industry sniffing around the property, but all of them have chosen to take a pass on it. Comcast had some preliminary talks in late 2005, while AT&T has reportedly been contemplating a bid. Blockbuster reportedly came close to buying it as well.

One barrier to a Movielink sale has been the same thing that has kept the service from enjoying anywhere near the same popularity that the online music stores have: the studios' reluctance to relax the draconian DRM restrictions on the movies. Many suggest that the biggest barrier is Movielink's refusal to allow customers purchasing movies to burn a DVD copy so they can easily watch it on their living room TV or safeguard their purchase in the case of a drive failure.

Movielink has made a handful of improvements to its service since the beginning of the year, including allowing streaming of movies over a home network and selling movies at the same time they became available on DVD. That said, the download service will likely remain an albatross around the studios' necks until they increase the number of movies available in Movielink's library and chill out on the DRM restrictions. Most of all, they need to remember that they're competing with the very group they are trying to squash—pirates. Until they make those changes, Movielink is more likely to end up like the original incarnation of eMusic: unwanted, unloved, and unprofitable.